Homebuyers are reeling from higher mortgage rates and home prices. As a
result, total mortgage applications fell 2.5% from the previous week, according
to the Mortgage Banker Association's (MBA) seasonally adjusted data for the week
ending April 27.
Leading the decline, refinance applications fell 4%, while purchase
applications dipped 2% from the previous week. The Refinance Index decreased
4% from the previous week, as refinancing activity is down to
36.5% of all applications from 37.2% the prior week. That's the lowest level
since September 2008.
Meanwhile, mortgage rates jumped for 30-year fixed loans with conforming
balances of $453,100 or less to 4.80% from 4.73%. Points (including origination
fees) also increased to 0.53 from 0.49 for 80% loan-to-value ratio loans. Also,
average 15-year fixed rates hit their highest level since February 2011,
jumping to 4.21% from 4.13% the previous week, with points decreasing to 0.49
As mortgage rates inch closer to 5% this year, skyrocketing home prices
are adding another affordability barrier for many homebuyers. Home prices
surged 7% nationally from March 2017 to March 2018, and price increased 1.4%
from February 2018 to March 2018, according to the latest CoreLogic Home Price Index and HPI Forecast.
Rising home prices – and the dire shortage of homes on the market – show
no signs of abating. The national home price index is estimated to jump 5.2%
from March 2018 to March 2019, CoreLogic predicts. While a smaller 0.1% gain in
home prices is expected from March 2018 to April 2018, that is little comfort
to cash-strapped homebuyers who will bear the brunt of higher housing and
"Home prices grew briskly in the first quarter of 2018," said
Dr. Frank Nothaft, CoreLogic's chief economist, in a news release. "High
demand and limited supply have pushed home prices above where they were in
early 2006. New construction still lags historically normal levels, keeping
upward pressure on prices."
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